IN 1993 CLAIMANTS HAD PURCHASED $4,000 WORTH OF QUALCOMM AND BY THE SUMMER OF 1999 THE PURCHASE HAD GROWN TO $280,000. THIS COMBINED WITH AN IRA, OTHER ACCOUNTS AND RETIREMENT APPROACHING, THE [CUSTOMERS] FELT THAT IN ORDER TO PRESERVE THESE GAINS AND PROVIDE FOR RETIREMENT, THEY NOW NEEDED PROFESSIONAL HELP. THEY WERE REFERRED TO JOE REX WOODS AND OPENED SEVERAL ACCOUNTS IN LATE 1999. WOODS IMMEDIATELY REPLACED SOME OF THE QUALCOMM STOCK WITH OTHER VOLATILE TECHNOLOGY COMPANIES. IN EARLY 2000, WOODS BOUGHT MORE TECH STOCK, AGAIN SELLING QUALCOMM. DESPITE ALL OF THE TALK ABOUT DIVERSITY, ASSET ALLOCATION, RISK MANAGEMENT AND CONSERVATIVE MANAGEMENT THE ACCOUNTS NEVER HELD LESS THAN 88% IN EQUITIES. FROM LATE 1999 THROUGH 2004, AS THE VALUE OF THEIR PORTFOLIO FELL, THE [CUSTOMERS'] CLAIM THAT MR. WOODS WAS RARELY AVAILABLE. INSTEAD THEY RECEIVED CALLS FROM HIS ASSISTANT, [OTHER FIRM EMPLOYEE] ASSURED THE [CUSTOMERS] NOT TO WORRY. THE [CUSTOMERS] CLAIM TO HAVE LOST OVER $200,000 DUE TO THE MISMANAGEMENT OF THEIR ACCOUNTS BT MR. WOODS AND [THIRD PARTY]. 10/1999-03/2005

$200,000.00

$235,000.00

CLIENTS LOST NO MONEY AND OUTPEFORMED THE S&P 500 AND THE NASDAQ INDEX AFTER FEES. CLIENT PURCHASED STOCKS IN 1999 AND 2000. THEY SOLD ONLY STOCKS WITH CAPITAL LOSSES IN 2003 TO OFFSET A CAPITAL GAIN FROM REAL ESTATE. IN 2006 CLIENT FILED A COMPLAINT ABOUT THOSE SAME STOCKS CLAIMING THEY DID NOT MEET THEIR INVESTMENT OBJECTIVE. CLIENT REVIEWED THEIR ACCOUNTS ONLINE IN EXCESS 700 TIMES AND TRACKED THEIR PORTFOLIO ALMOST DAILY VIA AOL. AMOUNT REFLECTED UNDER INDIVIDUAL CONTRIBUTION IS AMOUNT THE FA IS REQUIRED TO PAY PURSUANT TO CONTRACT SIGNED BY INDIVIDUAL. THIS AMOUNT MAY BE REDUCED BY ERRORS AND OMISSION INSURANCE PENDING A FINAL DETERMINATION BY THE E&O COMMITTEE AS TO COVERAGE.

CLAIMANT ALLEGED UNAUTHORIZED TRADING, FAILURE TO FOLLOW CLIENT INSTRUCTIONS AND MISREPRESENTATION RESULTED IN LOSSES OF $133020.20.

$133,020.20

RR WOODS DECLINED MEDIATION ON MARCH 6, 2001. CLAIMANT HAS ABANDONED ALL CLAIMS.